Daily Report 090215 2015-02-09
Macro Economy
In domestic market, the exports in January fell by 3.3% with a year ago while imports dropped by 19.9%, both of which are significantly lower than expected. However, the trade surplus is ﹩60.032 billion, breaking through the historical high. General administration of customs claims that China Export Leading Indicator (CELI) declines for the past four straight months, indicating downward pressure on China’s exports in Q1 and Q2. Besides, investors are recommended to pay attention to domestic CPI and currency financing data which will be released this week.
Main contract of domestic gold AU 1506 slumped by 2.03%. The gold kept dropping after breaking through the triangle convergence region. However, strong bolster was found around RMB 250. In terms of operations, recent trend of rallying seems coming to an end. It is expected that the gold may fluctuate and drop. Previous short positions opened at RMB 254.5 could be closed around RMB 250 if the market is weak during the intraday trading. Defensive moves should be prepared at RMB 252. The US non-farm employment increased 257 thousand in January. This figure has been higher than 200 thousand for twelve straight months. Although unemployment rose to 5.7%, the wage growth by 0.5% on year-on-year basis, indicating the strong trend of recovery of the employment market. Investors are then increasingly expecting the rate hike in the middle of this year. The US dollar index soared while the gold plunged. However, concerns about the Greece situation may provide bolster to the gold market.
Main contract of domestic silver AG 1506 dropped following the trend of gold in the night session last Friday. The decline of silver was 1.75%, which was not as high as that of gold. Downward pressure was found around the 10-day moving average at RMB 3685. However, bolster was found around RMB 3555 as well. As for operations, previous short positions opened at RMB 3800 could be held. Short positions opened at RMB 3600 could be closed and make a profit if the market is weak during the intraday session. On the whole, silver is still following the trend of gold while showing more volatility and the characteristic of weak metal. In foreign market, the silver rallied to ﹩ 18.5 and then dropped. The trend of rallying may come to an end these days.
Stock Index
Stock index fluctuated and then corrected on Friday. Due to the weak economy and enhanced supervision on leverage fund, the reserve reducing policy adopted by the Central Bank failed to stimulate the index. 24 shares are going to subscribe this week, and RMB 2 trillion, as estimated, would be frozen due to this. Thus funds are in the face of challenges. Simultaneously, Shanghai 50ETF has listed this Monday, cross-market-trading might lead to volatility of stock index. In conclusion, until enough increment funds enter the market, indexes would remain the game of deposited funds, further correction might happen this week.
Overseas and domestic copper prices fluctuated in highs last Friday. Though U.S. dollar index surged 1.145 basis points, copper prices performed strongly. U.S. Jan. non-farm payrolls rose by 257,000—11th months above 200,000, and the monthly earnings rallied, driving the expectation of U.S. interest raise this year, and supporting U.S. dollar surge. Yet, copper markets performed well. The international trading data released by the Chinese government in the weekend was pretty bad, both import and export slumped. Non-forged copper and copper materials imports of China fell by 23% at 410,000 tons; plus the PMI broke below 50, the weakness of Chinese economy can seen from that. Also, such situation raised the possibility of the government to publish relative policies. Sayings from latest news, the “One Belt and One Road” project has earned the permission, is likely to be carried out after the National People’s Congress and the Chinese Political Consultative Conference (NPC & CPPCC), might becoming one of the momentums driving Chinese economy.
On the European hand, current Greek salvage agreement is going to expire on 28th this month. The chairman of Euro group declared the “ultimatum”—16th February is the last chance of Greece, and obviously the Greek issue is the recent focus. LME spot premium remained around $30, the inventory increased 36,000 tons last week. Chinese spot discount was RMB 80-0 yuan, and the inventory of the exchanges rose 2,345 tons. Fundamentals’ weakness pressure copper markets, yet with prospective bullish chances.
In a short-term, LME copper price is rebounding, but can only open the uptrend space by breaking above 5-day moving average of $5,720, and the support line is at $5,570. The support line of domestic 4-month copper is at RMB 40,500.
U.S. soybean edged down at the close last Friday, being pressured by strong U.S. dollar and technical selling. Surges of Malaysian palm oil and crude oil supported grease, and the stronger grease might restrain future soymeal. USDA is going to release the monthly supply and demand report this Tuesday, and the market expected U.S. 2014/15 annual soybean inventory would lower to 0.398 billion bushels, from 0.41 bushels in last month. Global 2014/15 annual soybean ending inventory is 90,440,000 tons, 9,078 tons last month. We consider there would be little impacts this report on the market, short-term U.S. resistance line is at $10, as for the support line, focus on the line at 950 cents. Short-term South American weather is okay. DCE soybean rebounds associated with overseas markets, Soybean No.1 waves around RMB 4,400. Theoretically, the warrant cast of Soybean No.1 is above RMB 4,500/ton, thus, less short opportunities in a short term. Spot prices of soymeal corrected in many markets. Sales of oil factories were good last week, inventory lightened up, but unexecuted contracts increased; plus the demand of fodder is in the front of a downturn period, prices would be undermined in a certain extent. The short-term U.S. soybean resistance line is at $10, while for the domestic soybean, the resistance line is at RMB 2,800.
Remain the approach of sell-on-the-rally for soymeal. And for Soybean No.1, seek short opportunities above RMB 4,500.
PP futures fluctuated and then went higher last week. On the upstream hand, FOB Korea propylene increased by $25, and averaged at $805.5/ton. On the spot hand, polypropylene market prices rebounded rapidly associated with the surge of crude prices this week. Downstream manufacturers purchased to cover positions, cut petro-chemical products inventories promptly, and took the opportunity to raise ex-factory prices. Accordingly, market quoted prices rose.
Take wires as an example, last week’s quoted prices of Northern China, Eastern China and Southern China were RMB 7,900-8,350, RMB 8,200-8,300 and RMB 8,400-8,500.
The main support feature of fundamentals is crude oil prices. View the market as a whole, current prices have surged to RMB 7,500-8,000, but this interval is previous cost compact area. Moreover, prices are pressured by 60-day moving average, and whether the uptrend of crude oil would keep along is uncertain, the recent volatile interval is estimated to remain at RMB 7,500-8,000.
                                                                              Dong LV (Investment Certificate NO. TZ008452)